Hapag and Maersk Adjust As Container Rates Fall

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By MarEx 2015-11-06 18:50:16

On Friday, Maersk issued a weak earnings report for the third quarter, while the Hapag-Lloyd IPO struggled to make gains in opening trading.

Hapag-Lloyd had revised its offering price downwards to 20 euros, and while the stock opened at 20.05, it soon fell to 20.00, indicating weak investor demand.

"It was a tough fight," Chief Executive Rolf Habben Jansen said on the floor of the Frankfurt exchange after the opening.

Several large investors backed out of share orders after Maersk issued a warning regarding its upcoming earnings report.

The earnings report, which showed third-quarter net profit almost halved to $778 million from $1.5 billion a year ago, comes two days after Maersk Line said it would slash costs, cut staff by almost a fifth and pull out of some vessel orders.

Despite a challenging market environment and a previous announcement that Maersk would idle some of its massive Triple E liners, Moller-Maersk CEO Nils Smedegaard Andersen announced in a conference call Friday that “we will continue to invest to retain our market share.”

Shipping demand grew only one percent in the third quarter, the lowest level since the financial crisis in 2008.

A slow rate of growth in shipping demand over the seven years since, a slowing Chinese economy and an oversupply of container ships have all contributed to a slump in freight rates.

On one of the busiest routes in the world, from China to Europe, spot rates this year have been at barely profitable levels. This week they fell 32 percent to $674 per container.